Trade Court Upholds EAPA Evasion Result in Steel Wire Garment Hangers From China Case

The Court of International Trade on May 2 upheld a CBP evasion finding in an Enforce and Protect Act investigation, with Judge Jane Restani finding that the standard for initiation of an EAPA investigation is low and that the "voluminous evidence" provided by an initial allegation filed by M&B meets both the government’s and importer CEK Group's proposed standards of reasonable suggestion.

CBP assessed "the totality of the circumstances" that M&B provided and correctly found that those circumstances reasonably suggested that CEK was importing transshipped Chinese wire hangers from Thailand with the help of Thai exporter and manufacturer NWH, the court said.

In determining whether to begin an investigation, CBP considered evidence regarding NWH's self-identification as a wholesale company, a foreign market research report that suggested “trading relationships” between NWH and alleged Indian transshipping company Kaylee, and CEK's shared address and owner with AB MA Distribution Corporation, which imported hangers from NWH and Kaylee, along with a bill of lading showing that NWH imported hangers from a company located in China, and an investigation into CEK’s alleged manufacturing site.

The court said it was also "undisputed" that during the investigation, CEK and NWH failed to respond to CBP's information requests, justifying the use of adverse inferences. The court was unconvinced by CEK's argument that CBP ignored evidence to create gaps in the report before using AFA. It is not for CEK or NWH to decide which information and questions are necessary to the investigation, Restani said. CBP has the authority to collect and verify additional information that is “necessary to make the determination.”

CEK's two procedural challenges were also unconvincing. The argument that CBP improperly rejected NWH’s video evidence cited "no authority to support its position," Restani ruled. CEK's other assertion that CBP failed to provide adequate public summaries of a Homeland Security attaché report failed because CBP only used the report was to initiate the investigation and the EAPA does not permit pre-investigation comments by the subjects of potential investigations, the court said.

CEK argued that the court should remand and terminate an EAPA investigation because the underlying allegation was insufficient, not containing information required to find a reasonable suspicion of evasion of an antidumping duty order, CEK argued in its Feb. 15 reply brief (see 2302230052).

(CEK Group v. United States, Slip Op. 23-69, CIT # 22-00082, dated 5/2/23; Judge: Jane A. Restani; Attorneys: David Craven of Craven Trade Law for plaintiff CEK Group; Elisa S. Solomon for defendant U.S. government; and Frederick Waite of Vorys Sater for defendant-intervenor M&B Metal Products Co.)